Bombay High Court
Nidhi Singh vs Central Bureau Of Investigation And Anr on 30 July, 2024
2024:BHC-AS:30454
Megha 20_wp_2518_2023_fc.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO.2518 OF 2023
Nidhi Singh .... Petitioner
V/s.
Central Bureau of Investigation and
Anr. .... Respondents
__________________________________________________
Mr. Jaideep Lele i/b. Ms Namrata Agashe for the Petitioner.
Mr. Shreeram Shirsat with Mr. Shekar V. Mane & Mr. Nikhil Daga for
Respondent No.1-CBI.
Mr. Ashok R. Metkari, APP for Respondent No.2-State.
________________________________________________
CORAM : SANDEEP V. MARNE, J.
DATED : 30 July 2024.
JUDGMENT :
1) The Petitioner has filed this Petition challenging Order dated 20 MEGHA February 2023 passed by the learned Special Judge (CBI), Greater Mumbai, SHREEDHAR PARAB Digitally signed by rejecting application at Exhibit-122 seeking discharge under Section 239 of MEGHA SHREEDHAR PARAB Date: 2024.08.02 10:41:27 +0530 the Code of Criminal Procedure, 1973.
2) Petitioner is arraigned as accused No.5 in CBI Special Case No.3 of 2012 for offences alleged under Sections 120 B r/w 420, 465, 468 and 471 of the Indian Penal Code, 1860 and Section 12(2) r/w Section 13(1)(d) of the Prevention of Corruption Act, 1988.
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3) So far as the Petitioner is concerned, she is accused of being a part
of criminal conspiracy with M/s. Prominent Exim Pvt. Ltd. (M/s. Prominent Exim) and its directors in the matter of discounting of bills of exchange by her without actual transactions having taken place. In short, it is alleged that accused Nos.1 to 3 created fraudulent supply orders through other accused firms/companies, Invoices, delivery challans, etc without any underlying transactions and submitted bills in respect of such nonexistent transactions and got the same discounted from Canara Bank, Khar West Branch, where Petitioner was posted as Credit Manager. Petitioner is accused of being a part of conspiracy with other accused as she discounted such fraudulent bills of exchange without verifying that the goods were actually transacted and transported. Another accusation against Petitioner is in respect of allowing temporary overdraft of Rs. 3.58 crores in the guise of bill discounting on 22 December 2008 without actually discounting any bills on that date and breaching the limit of her discretionary powers.
4) Petitioner filed application at Exhibit-122 seeking her discharge from supplementary charge sheet No. RC 11/E/2010 in CBI Special Case No.3 of 2012. The application was opposed by the Central Bureau of Investigation (CBI). The learned Special Judge has rejected Petitioner's discharge application by order dated 20 February 2023, which is subject matter of challenge in the present Petition.
5) Mr. Lele, the learned counsel would appear on behalf of Petitioner and would canvass following broad submissions:
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i) That there is total absence of any material to infer any conspiracy on Petitioner's part
ii) That Petitioner came to be posted as Credit Manager in Khar West Branch of Canara Bank (the Bank) for the first time on 4 August 2008 and transactions in question have allegedly taken place in November and December-2008. That Petitioner had recently taken over charge as Credit Manager in Khar West Branch and was not aware about any background of the Company and its directors, who were otherwise doing business with Bank for considerable period in the past.
iii) That there is absolutely no material to infer that there was any meeting of minds between Petitioner and other accused so as to make out offence under Section 120B of the IPC.
iv) That the agreement must be proved between the Petitioner and other accused to do or cause to be done an illegal act or a legal act by illegal means and in absence of such agreement, Petitioner cannot be termed as a conspirator. In support, he would rely upon judgment of the Apex Court in Lennart Schussler and Anr. Vs. Director of Enforcement and Anr.1
v) That for drawl of inference of conspiracy, there must be sufficient material to show that certain acts were done in furtherance of object of conspiracy at prior point of time than actual commission of the offence. In support, he would rely upon State of Kerala Vs. P. Sugathan and Anr2.
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vi) That the entire credit facilities are sanctioned by higher authorities and the role of Petitioner was merely at execution level and that therefore it cannot be contended that Petitioner had any decision making power so as to become a part of conspiracy with the other accused.
vii) That in her capacity as Credit Manager, Petitioner was not expected to physically verify whether the concerned goods were actually transported and delivered or not.
viii) Once party produces delivery challans, the Petitioner was bound to rely upon them and was not expected to run behind trucks/lorries to make sure that the goods were actually transported.
ix) That the entire charge is premised on erroneous expectation of Petitioner verifying actual transport of the goods, which did not form part of her duties.
x) He would take me through the procedure required to be followed while discounting the bills as per statement of Shri. A.R. Jayaprakash, retired General Manager, which does not envisage collection of any transport documents.
xi) That each of the bills of exchange discounted by Petitioner was accompanied by delivery challan.
xii) That Petitioner was not therefore equipped or expected to know that any fraudulent transactions have been effected by accused Nos.1 to 3 and in absence of allegation of prior knowledge or agreement between Petitioner and other accused for doing of any illegal act, she cannot be termed as conspirator.
xiii) That so far as the charge relating to temporary over drawl of Rs.3.58 crores is concerned, he would submit that the same was ___Page No.4 of 11___ 29 July 2024 ::: Uploaded on - 02/08/2024 ::: Downloaded on - 09/08/2024 21:43:40 ::: Megha 20_wp_2518_2023_fc.docx required to be generated temporarily only for the purpose of offsetting the delay in core banking system taking minimum of half an hour for discounting each bill. That therefore a practice was followed in the branch (in other branches also) for making the entries in core banking system to calculate the amount and give code to the bill discounting numbers to the loan account and subsequently discount the bill in the system with value date and thereafter collect interest from the value date. That in the present case it took almost 6 to 7 days to complete the whole procedure and transaction entries were completed by 30 December 2008 and therefore the case does not involve allowance of any overdraft as falsely alleged in the charge sheet.
xiv) That though the detail procedure in respect of temporary overdrawing of Rs.3.58 crores was explained in paragraph 10 of discharge application, learned Special Judge has proceeded to ignore the same altogether.
xv) That the order of the learned Special Judge suffers from complete non-application of mind and also from vice of perversity and the same is therefore liable to be set aside by discharging the Petitioner.
6) The Petition is opposed by Mr. Shriram Shirsat, the learned counsel appearing for CBI. He would submit that specific role is ascribed to Petitioner in the matter of discounting of various bills during November and December -2008 without confirming genuineness of the transactions. That as per the condition of sanction, it was the duty of the Branch Manager to confirm genuineness of transactions. That Petitioner was aware about the irregularities and illegalities committed by the concerned Company and its ___Page No.5 of 11___ 29 July 2024 ::: Uploaded on - 02/08/2024 ::: Downloaded on - 09/08/2024 21:43:40 ::: Megha 20_wp_2518_2023_fc.docx directors and still proceeded to discount their bills in absence of any genuine underlying transactions. That there is sufficient material to proceed against Petitioner and therefore he would pray for dismissal of the Petition.
7) I have considered the submissions canvassed by the learned counsel appearing for both the parties and have gone through the findings recorded by the learned Special Judge in the impugned order as well as various documents placed on record.
8) Petitioner essentially faces two kinds of charges in the supplementary charge sheet No.1/PL/11 dated 29 December 2011 filed by CBI. In the first category of charge, accusations are with regard to the act of bill discounting done by Petitioner while functioning as Credit Manager of Khar (West) Branch of Canara Bank. Petitioner is accused of discounting bills of exchange in respect of fraudulent transactions undertaken by various other accused Firms viz. M/s. Pyxis Exim Pvt. Ltd., M/s. Maxilla Pharma Pvt. Ltd., M/s. Zophar Surgicare Systems Pvt. Ltd. and M/s. Crescent Chemical Trading Co. It is alleged that the said Firms furnished false purchase orders to M/s. Prominent Exim Pvt. Ltd. (accused No.1) for supply of drugs and the director of accused No.1 prepared false proforma invoice for such bulk drug supply. Corresponding bills of exchange and delivery challans for the said fraudulent tax invoices were created without any actual underlying transaction. The said set of false bills of exchange were submitted for discounting at Khar (West) Branch of Canara Bank and the same have been discounted by Petitioner in her capacity as Credit Manager. Petitioner is accused of not verifying genuineness of the said trade transactions thereby causing loss to the Canara Bank. By way of illustration, the details of one ___Page No.6 of 11___ 29 July 2024 ::: Uploaded on - 02/08/2024 ::: Downloaded on - 09/08/2024 21:43:40 ::: Megha 20_wp_2518_2023_fc.docx such fraudulent transaction resulting in bill discounting by Petitioner as reflected in paragraph 8 of the charge-sheet are reproduced below:-
(8) That in pursuance of the above said criminal conspiracy, Sh. Nikhil Salot Director, M/s. Pyxis Exim Pvt Ltd. furnished a false Purchase Order bearing No. 079/08-09 dated 24.11.2008 addressed to M/s. Prominent Exim Pvt Ltd., Mumbai for supply of 3800kgs of 4-Methoxy Phenacyl Bromide and 1900 kgs of 2-3 Dichloro Benzyd Nitrile for a total value of Rs.
1,33,95,000/- without any genuine business transaction. Sh. Kirti M. Kanakia had prepared the Proforma Invoice bearing No. PEPL/085 dated 18.11.2008 for the said bulk drugs, Tax Invoice bearing No. 077/08-09 dated 04.12.2008, Tax Invoice No. 078/08-09 dated 04.12.2008, Tax Invoice No. 079/08-09 dated 04.12.2008, Tax Invoice No. 080/08-09 dated 05.12.2008, Tax Invoice No. 081/08-09 dated 05.12.2008, Tax Invoice No 082/08-09 dated 05.12.2008, Tax Invoice No 083/08-09 dated 05.12.2008, and the corresponding Bill of Exchange and Delivery Challan for the said Tax Invoices, without any underlying transactions) Sh. Kirti M. Kanakia further got discounted these false bills with the Canara Bank, Khar West Branch. Mumbai on 23.12.2008. The Bill of Exchange were bearing No. 059/08-09 dated 04.12.2008, Bill of Exchange bearing No. 060/08-09 04.12.2008, Bill of Exchange bearing No. 061/08-09 dated 04.12.2008, Bill of Exchange bearing No. 062/08-09 dated 05.12.2008, Bill of Exchange bearing No. 063/08-09 dated 05.12.2008, Bill of Exchange bearing No. 064/08-09 dated 05.12.2008, Bill of Exchange bearing No. 065/08-09 dated 05.12.2008, have also been signed and accepted by Sh. Kirti M. Kanakia. Smt. Nidhi Singh, Manager, Credit, Canara Bank, Khar West Branch, Mumbai discounted these false BEs. These bills were not accompanied by the transport documents which was one of the main sanctioned conditions for ensuring the genuiness of the trade transactions. Despite such discrepancies, Ms.Nidhi Singh, Manager, discounted the bills against sanction terms, putting the funds of the bank to risk. These bills were not paid, causing loss to the bank. These bills are pending overdue till date.
9) Mr. Lele, has strenuously contended that Petitioner took over as Credit Manager of Khar (West) Branch of Canara Bank on 4 August 2008 and was absolutely unaware of any plan on the part of the other accused in defrauding the Bank. However, it appears that accused Nos.1 to 3 were ___Page No.7 of 11___ 29 July 2024 ::: Uploaded on - 02/08/2024 ::: Downloaded on - 09/08/2024 21:43:40 ::: Megha 20_wp_2518_2023_fc.docx indulging in such fraudulent bill discounting from Canara Bank since 2005. It appears that Directorate of Revenue Intelligence (DRI) had taken the director of first accused Company in custody in the year 2005 and intimation was given to the Bank that the first accused Company was exporting cheap talcum powder in place of costly bulk drugs and that connected bills were being discounted by the Bank. It is alleged that the Bank officials were thus fully aware that first accused Company and its directors were actually not exporting any drugs and were fraudulently getting the bills discounted from Canara Bank.
10) From the statement of Mr. A.R. Jayaprakash, General Manager (retired), it appears that at the time when Petitioner took over as Credit Manager at Khar (West) Branch, the account of the first accused Company with the Bank was already Graded- VI (High Risk). The account was also appearing in special watch list. It therefore cannot be contended that Petitioner was totally oblivious about the background of the first accused Company and its directors.
11) To make things worse for Petitioner, it appears that she herself became suspicious about passing of cheques of first accused Company by the Senior Manager without consultation. This is borne out from the defence sought to be raised by her that she had brought irregularities to the knowledge of then Senior Manager of the Branch and the same were also reported to DGM, CEO, Mumbai by letter dated 5 November 2018. Thus, despite being suspicious about the transactions of the first accused Company and its directors, Petitioner went on discounting its bills without taking pains to verify whether actual trade was transacted or not.
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12) Prima facie therefore there is some material available on record to
make out a case of prior knowledge on the part of Petitioner about other accused submitting fraudulent bills for discounting in absence of any actual trade.
13) So far as the aspect of conspiracy is concerned, Mr. Lele had relied upon judgments of the Apex Court in P. Sugathan and Lennart Schussler (supra) in support of his contention that for making out offence of criminal conspiracy under Section 120-A of the IPC, it is necessary that an agreement existed between the accused for commission of offence and that overt act is done by one or more persons in pursuance of such agreement. It is also well settled that the accused must be in knowledge of the conspiracy. Mr. Lele has contended that there was no sufficient time available for Petitioner, between time gap between the date of taking over as Credit Manager and the actual act of bill discounting, for hatching any conspiracy with the other accused and that in any case, no material is produced, on the basis of which an inference can be drawn that there was any meeting of minds between the Petitioner and other accused for commission of any offence. In my view, however this is a clearly triable issue as CBI has sought to plead the case of criminal conspiracy between Petitioner and other accused for commission of the crime alleged. It is too premature at this stage to infer, merely on account of length of time gap between Petitioner's posting at Khar (West) Branch as Credit Manager on 4 August 2008 and first transaction in November 2008, that she was absolutely unaware about deeds of other accused or that she has absolutely no role to play in respect of fraudulent transactions. It cannot be ___Page No.9 of 11___ 29 July 2024 ::: Uploaded on - 02/08/2024 ::: Downloaded on - 09/08/2024 21:43:40 ::: Megha 20_wp_2518_2023_fc.docx inferred at this stage that the Petitioner acted bonafidely and was not part of the conspiracy.
14) Mr. Lele's submission is that Petitioner was not expected to secure transport documentation before discounting the bills. However, in sanction letter, a specific condition was prescribed placing the entire burden of confirmation of genuineness of transactions on the Branch Manager. Thus, it was Petitioner's duty to confirm that the transactions, in respect of which bills were sought to be discounted, were genuine. It was for her to devise the necessary mechanism to ensure that the concerned trade transactions had actually taken place. This is also borne out by the statement of Mr. A.R. Jayaprakash, retired General Manager of the Bank, who has stated that it was Petitioner's duty to satisfy herself about genuineness of the transactions ' in whatever way it was possible'. Therefore, the submission of Mr. Lele that Petitioner was not expected to run behind lorries to verify actual transportation of goods is totally baseless. Once responsibility of verifying genuineness of trade transaction is put on the Branch officials, it is for them to devise mechanism to ensure verification of trade transaction. Such Branch officials cannot blindly rely upon delivery challans for inferring that the goods were actually traded and delivered.
15) So far as the second category of charge of temporary over drawing of Rs.3.58 crores in the guise of bill discounting is concerned, Petitioner has sought to justify the said action on account of delay in discounting of each bill and practice followed by Khar (West) Branch (and by other Branches also). What is contended by her is that the limit of sanctioning Overdraft facility (of Rs. 75 Lakh) is erroneously mixed up with the temporary over ___Page No.10 of 11___ 29 July 2024 ::: Uploaded on - 02/08/2024 ::: Downloaded on - 09/08/2024 21:43:40 ::: Megha 20_wp_2518_2023_fc.docx drawl noticed on account of system delay in discounting of bills. That since discounting of each bill was taking time, it was normal practice to allow credit towards such bill to the concerned customer and later adjust such credit against the discounted bill by collecting interest from the date of grant of credit. That this practice was creating temporary over drawl in the system, which is erroneously confused by the CBI with limit on Petitioner's authority to sanction OD facility. While there could be some substance in what is sought to be contended by Petitioner, in my view, this could at best be her defence and not a grant for allowing discharge. If procedure adopted by Petitioner was otherwise a matter of practice uniformly followed for all other customers of the Bank, it is for the Trial Court to consider this aspect. In any case, in respect of first category of charge relating to bill discounting, no case is made out for Petitioner's discharge. Therefore, even if it is assumed that case of conspiracy is not made out in relation to the charge of over drawing of Rs. 3.58 crores, Petitioner cannot be granted partial discharge.
16) After considering overall conspectus of the case, in my view no case is made out for warranting interference in the impugned order passed by the learned Special Judge (CBI), Greater Mumbai. Writ Petition being devoid of merits is dismissed without any orders as to costs. However, the Trial Court shall not be influenced by any of the observations made in the order while deciding the case finally.
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